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Palmer/Kane LLC v. Gareth Stevens Publishing

United States District Court, S.D. New York

September 7, 2017

PALMER/KANE LLC, Plaintiff,
v.
GARETH STEVENS PUBLISHING, Defendant.

          OPINION AND ORDER

          GREGORY H. WOODS, UNITED STATES DISTRICT JUDGE.

         Plaintiff Palmer/Kane LLC alleges that Defendant Gareth Stevens Publishing infringed its copyrights in a number of stock photographs by using them in a series of books without a license or other form of permission. At its inception, this lawsuit alleged infringement of eight photographs with titles ranging from the evocative “Sandstone Arch in the Valley of Fire” to the slightly less poignant “Executive with Calculator.” However, Palmer/Kane voluntarily dismissed its claims relating to two of the photographs in June 2016, and has now decided not to pursue its claims with respect to two others. Accordingly, only four photographs remain at issue.

         In its motion for summary judgment, Gareth Stevens now attempts to establish that Palmer/Kane lacks standing to bring this action because its registration certificate covering the relevant photographs is invalid, and that, in any event, the photographs were used pursuant to and within the scope of licenses granted by Palmer/Kane's exclusive licensing agent. In its own motion for summary judgment, Palmer/Kane seeks to establish that its registration certificate is valid, and that Gareth Stevens infringed its copyrights by printing books containing the photographs at issue prior to the issuance of any license and by selling copies of those books after the licenses had expired.

         The Court has already twice held that disputes of fact pervaded the question whether Palmer/Kane's registration certificate is valid for the purpose of conferring standing to sue in light of a provision added to the Copyright Act by the Prioritizing Resources and Organization for Intellectual Property Act of 2008. The record on summary judgment compels the same conclusion and also makes clear that disputes of fact preclude summary judgment on the question whether a license agreement covered Gareth Stevens's relevant use of the photographs. As a result, Gareth Stevens's motion is DENIED except with respect to Images 2 and 8, and Palmer/Kane's motion is DENIED in its entirety.

         I. BACKGROUND[1]

         A. Facts

         Plaintiff Palmer/Kane LLC (“Palmer/Kane”) is a stock photography production company that has been in business since 1975. See Def.'s Rule 56.1 Counterstatement (ECF No. 93) (“Def.'s 56.1”) ¶¶ 4-6. Defendant Gareth Stevens Publishing (“Gareth Stevens”) creates and publishes educational textbooks, instructional technology materials, reference works, and other similar materials and publications. Id. ¶ 8. Palmer/Kane alleges in this lawsuit that Gareth Stevens infringed its copyrights in a number of photographs that were created by photographer Gabe Palmer as works-made-for-hire for Palmer/Kane or its predecessor, Palmer/Kane Inc.[2] Id. ¶ 3.

         Although Palmer/Kane initially included eight photographs in this suit, only four remain. On June 15, 2016, the parties stipulated to the dismissal of all claims relating to what are labeled in the amended complaint as Image 1 (“Superfund Clean Up # 1) and Image 3 (“Boy and Girl at Locker”). ECF No. 54. Additionally, in a letter dated March 31, 2017, Palmer/Kane informed the Court that it was withdrawing its opposition to Gareth Stevens's motion for summary judgment as to Image 2 (“Sandstone Arch in Valley of Fire”) and Image 8 (“Mother and Daughter Coloring”). ECF No. 102. As a result, only the images identified in the amended complaint as Images 4-7- “Executive with Calculator, ” “Pharmaceutical Engineer, ” “Travel Agent, ” and “Senior Couple at Travel Agency, ” respectively-remain at issue (the “Images”).

         1. Registration of the Images

         Each of the Images remaining at issue in this suit is registered with the United States Copyright Office (the “CO”) under Registration No. VAu 529-623, which was issued with an effective date of June 25, 2001. Pl.'s Rule 56.1 Counterstatement (ECF No. 87) (“Pl.'s 56.1”) ¶¶ 34, 36, 38, 40.[3] The history of how Registration No. VAu 529-623 came to be issued is highly material to the parties' motions.

         On May 26, 1999, Palmer/Kane Inc. filed an application with the CO to register more than 900 photographs as an unpublished collection with the title “Past Mug Shots Images on the Stock Market Web Site as of 2/29/99.” Id. ¶ 3. The application was signed by Palmer/Kane's principal, Patricia Kane. Id. ¶ 4. The deposit material submitted to the CO with the 1999 application consisted of printouts of pages from stockmarketphoto.com, the website of Stock Market Photo Agency, Inc (“Stock Market”). Id. ¶ 5. Stock Market was Palmer/Kane's exclusive licensing agent from 1985 until early 2000. Id. ¶¶ 6-7. During the life of that licensing-agent arrangement, Palmer/Kane submitted numerous photographs to Stock Market, including the “Past Mug Shots Images.” Id. ¶ 8.

         Throughout the course of Palmer/Kane's arrangement with Stock Market, Stock Market published near-annual print catalogs of photographs and registered those catalogs with the CO as published works. Id. ¶¶ 9-10. There is no evidence in the record, however, that any of those catalogs contained the “Past Mug Shots Images.”[4] In 1996, Stock Market also published and registered a glossy catalog of stock photographs available for licensing entitled American Mosaic I. Id. ¶ 11; Kjellberg Decl., Ex. 28. American Mosaic I contains several images credited as “Mug Shots, ” but the record does not make clear whether any of them are among the “Past Mug Shots Images” submitted to the CO for registration in 1999.[5] The Court was able to determine, however, that the excerpt submitted by Gareth Stevens does not contain any of the Images at issue in this lawsuit. Compare, e.g., Decl. of Pat Kane in Supp. of Pl.'s Mot. for Partial Summ. J. (ECF No. 75) (“Kane Decl.”), Ex. 1 (showing the Images), with Kjellberg Decl., Ex. 27 (excerpts from American Mosaic I). During the period in which Stock Market acted as Palmer/Kane's exclusive licensing agent, Stock Market also published and registered a number of catalogs in CD-ROM format, Pl.'s 56.1 ¶¶ 12-14, though again, there is no evidence in the record establishing that any of the Images were included on the CD-ROMs.

         A print catalog published by Stock Market in 1998 included the phrase “Search over 30, 000 images online at the hottest site in stock, ” lists the URL www.stockmarketphoto.com, and includes a screenshot of what appears to be the stockmarketphoto.com website. Pl.'s 56.1 ¶ 15; Kjellberg Decl., Ex. 33, at p. 5. According to Ms. Kane, however, the website was in beta at that time and did not “go live” to the public until sometime after she submitted the application to the CO in May 1999. Decl. of Pat Kane in Opp'n to Def.'s Mot. for Issuance of Request to Register of Copyrights Pursuant to 17 U.S.C. § 411(b)(2) (ECF No. 39) (“Kane 411(b)(2) Decl.”) ¶ 10.

         Palmer/Kane attached to its 1999 registration application a separate page reading:

Previous Registration:
* A stock catalog/CD/web site containing these photographs were previously registered, however that registration did not apply to this specific photograph, only in the authorship in the catalog claimed by the Stock Market Photo Agency.
Registration Number

Stock CD 2

#863-782

2/26/99

Stock CD 3

#863-774

2/26/99

American mosaic

#863-925

2/26/99

Kjellberg Decl., Ex. 52, at p. 3. Each of those registration numbers corresponds to a prior registration by Stock Market for published works. Kjellberg Decl., Exs. 24, 32, 53. However, Ms. Kane has submitted a declaration stating that she has no recollection of attaching this document to the 1999 application form and that, in any event, she could not have checked the accuracy of any information about those registration because the CO had no online resources at that time. Decl. of Pat Kane in Opp'n to Def.'s Mot. for Issuance of Request to Register of Copyrights Pursuant to 17 U.S.C. § 411(b)(2) (“ECF No. 39) (“Kane 411(b)(2) Decl.”) ¶¶ 15-16.

         By letter dated March 14, 2000, the CO notified Palmer/Kane that it was “delaying registration” for the [Past Mug Shots Images on the Stock Market Web Site as of 2/29/99] collection for the reasons enumerated below.” Pl.'s 56.1 ¶ 19; Kjellberg Decl., Ex. 7. As relevant here, the letter explained that “Space 1 [Title of This Work] and the deposit indicate that publication has occurred; however the publication information [Date and Nation of First Publication of This Particular Work] has not been entered in space 3b as required.” Pl.'s 56.1 ¶ 19. The letter explained that “a collection of items may be registered on one application only if each of the items within that collection were all first published together on the same date, or if all the items are unpublished.” Id. ¶ 20. The March 14, 2000 letter also explained:

[I]f some of the items you wish to register were published separately from other items in the collection (on different dates) that you also wish to register, please complete a separate application (and submit a new fee) for each work or group of works that were first published on a different date. Please ensure that the correct month, day, year, and nation of first publication is entered in space 3b of each application.
Alternatively, if all of the items you wish to register within the collection were all first published together on the same date that you indicate in space 3b of the application, please confirm this in a brief statement.
. . .
Alternatively, if publication has not occurred, please leave all of space 3b blank.

Pl.'s 56.1 ¶ 21; Kjellberg Decl., Ex. 7. As an additional reason for the delay in registration, the March 14, 2000 letter from the CO stated:

Space 5 has been completed incorrectly. Moreover, it refers to a document with information outside of the application, which is not acceptable. . . . The information in space 5 and the additional document indicate that this work is derivative of previously registered work; however, the derivative work statement has not been entered in space 6 as required.

Pl.'s 56.1 ¶¶ 22-23.

         The CO's March 14, 2000 letter provided Palmer/Kane with 120 days to respond, but Palmer/Kane did not respond within that time. Pl.'s 56.1 ¶¶ 24-25. In a subsequent undated letter, the CO informed Palmer/Kane: “Since we have not received a reply to our last letter concerning this work, we are closing our files and returning your copy. . . . If you wish to re-apply for registration. [sic] It will be necessary to submit a new application, deposit and fee.” Kjellberg Decl., Ex. 8. The letter included the notation “Enclosures: Deposit Ret'd.” Id.

         On May 18, 2001, Patricia Kane signed another application form to register the 900-plus “Past Mug Shots Images on the Stock Market Web Site, ” this time with “as of 2/29/99” omitted from the title. Pl.'s 56.1 ¶ 27; Kjellberg Decl., Ex. 5. As on the 1999 application form, space 3b (Date and Nation of First Publication of This Particular Work) was left blank. Pl.'s 56.1 ¶ 30. Space 5, which asks about previous registrations for the particular work, was also blank, and there was no additional document attached referencing previous registrations of Stock Market's materials. Id. ¶ 29; Kjellberg Decl., Ex. 5.

         Based on the 2001 application form, the CO issued Registration No. VAu 529-623 with an effective date of June 25, 2001. Pl.'s 56.1 ¶ 31. As with the application form, the certificate of registration does not indicate that the photographs registered thereunder had been published. See Pl.'s 56.1 ¶ 32; Kjellberg Decl., Ex. 5. Nevertheless, it is undisputed that the photographs that are the subject of the Registration No. VAu 529-623 were, in fact, published before the effective date of June 25, 2001, and even before the second application form was signed on May 18, 2001. Pl.'s 56.1 ¶¶ 28, 33.

         Ms. Kane asserts that she proceeded in this fashion at the CO's direction, and that she understood that the application form she signed on May 18, 2001 was not a new application, but rather a continuation of the application process that had begun in 1999, and a correction of the 1999 application form. Notwithstanding the undated letter stating that the CO was closing the 1999 application, Ms. Kane testified that it was not closed, Kjellberg Decl., Ex. 54, Dep. of Palmer/Kane LLC by Pat Kane (“Kane Dep.”) 222:13-223:13 (Mar. 29, 2016), and points to the fact that the deposit that accompanies the now-registered photographs (including the Images) bears a stamp indicating that it was filed in June 1999, rather than in May 2001. Id. 222:22-225:11; see also Decl. of Clyde A. Shuman in Opp'n to Def.'s Mot. for Issuance of Request to Register of Copyrights Pursuant to 17 U.S.C. § 411(b)(2) (ECF No. 38) (“Shuman 411(b)(2) Decl.”) ¶ 4 & Ex. 2. Ms. Kane avers that she “had numerous conversations with the [CO] regarding [the] application and followed the instructions [she] was given to correct [the] application and to secure the VAu 529-623 registration.” Kane 411(b)(2) Decl. ¶ 8.

         According to her declaration, she explained to the CO examiner who had written the March 14, 2000 letter that the “Stock Market website referred to [in] the registration title and in the footer was a beta version of the website and that the actual TSM website did not ‘go live' or become available to the public until much later.” Id. ¶ 10. Ms. Kane also avers that “[t]he [e]xaminer's other misconception in her March 14 letter was that the date in the title of the deposit was an indication it was published on or by that date. She was unaware that a website could be constructed but not functional, thereby not offering anything for sale or distribution.” Id. ¶ 11. According to Ms. Kane's declaration, the examiner then “recommended removing the date for clarity.” Id. She also claims that the CO asked her to submit a new form “because the first one was such a mess with white out and it would be used to physically create the final certificate of registration.” Id. ¶ 17. Ms. Kane states that she did so on May 18, 2011, but did not include a new deposit. Id. ¶¶ 17-18.

         2. The Licensing and Use of the Images

         Under the terms of an October 3, 2003 Photographer Representation Agreement (the “Agreement”), Palmer/Kane appointed Corbis Corporation (“Corbis”) as its exclusive licensor for all “Accepted Images, ” which is defined in the Agreement as “an image, composite, or collection of images, film, or illustration, in analog or digital form, supplied by you to Corbis and accepted by Corbis, with or without any caption or related textual information.” Kjellberg Decl., Ex. 1. Pursuant to the Agreement, Palmer/Kane granted to Corbis the right to “determine at [its] sole discretion the terms and conditions of any license or distribution of [Palmer/Kane's] Accepted Images, subject to the rights granted and restrictions imposed by and the limitations contained in this Agreement.” Id. The rights granted to Corbis under the Agreement included the right to use, reproduce, publish, exhibit, publicly display, distribute, and create derivative works of any Accepted Images. Id. The rights granted by Palmer/Kane under the Agreement “also include[d] the right of Corbis to sublicense to and authorize Corbis' customers . . . to exercise the rights listed above when using Accepted Images.” Id.

         Palmer/Kane alleges that its copyrights in Images 4-7 were infringed by Gareth Stevens's inclusion of those images in three publications: “Working in Banking and Finance, ” “Working in Engineering, ” and “Working in Travel and Tourism.” Am. Compl. (ECF No. 25) ¶¶ 22-24. Those books have also been referred to as “So You Want to Work in Banking and Finance, ” “So You Want to Work in Engineering, ” and “So You Want to Work in the Travel and Tourism Industry.” Decl. of Clyde A. Shuman in Supp. of Pl.'s Mot. for Summ. J. (ECF No. 76) (“Shuman Decl.”), Exs. 3-5. Each of the books was created by Hodder & Stoughton Limited, A Member of Hodder Headline Group (“Hodder”) in the U.K., and was published in the U.S., Canada, and the Philippine Republic pursuant to Coedition Agreements between Hodder and Gareth Stevens dated May 23, 2003 and June 16, 2003.[6] Kjellberg Decl., Exs. 3-4. The Coedition Agreements provided that Hodder would “produce 5, 000 bound copies” of each book to be sold by Gareth Stevens in the United States. Kjellberg Decl., Exs. 3-4.

         Effective August 1, 2004, Hodder entered into a Pricing Agreement with Corbis “with respect to future licensing by [Hodder] of Images from the Corbis Collection.” Kjellberg Decl., Ex. 81. The Pricing Agreement includes a section entitled “Terms of License, ” which reads as follows:

Licensing Parameters:
Non Exclusive, book format, single title production
One edition (hardback or Paperback - for clearing both editions see chart below)
Black & White or Colour
Printrun up to 40, 000
License Period 7 years
Editorial use only

Id. at 1. The Pricing Agreement also provides a chart of “Image Pricing” and provides that, “[i]n consideration of Corbis offering the special Image Pricing set forth above, [Hodder] agrees it will, during the term of this Agreement, order and license at least £80, 000 worth of rights managed images and royalty free images (“Minimum Commitment”). Id. at 1-3. It ...


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